Renovations and Home Insurance

Homeowners often make renovations to improve their residences, increase the value of their property, enhance efficiencies or features, or simply keep up with modern trends. However, what many homeowners may not realize is that these renovations can significantly impact their home insurance. The team at Paramount Insurance & Multiservice LLC is standing by to help you understand how renovations may affect your coverage needs.

Increased Property Value

One of the most common impacts of home renovations is an increase in the property’s value. If you’ve added a new room, upgraded your kitchen or bathroom, or made other substantial improvements, your home’s replacement cost may have increased. This is the amount it would cost to rebuild your home from scratch and is generally what your policy’s coverage limits should reflect. If your home insurance dwelling coverage limit is based on your home’s prerenovation value, it may no longer be enough to cover the cost of rebuilding your improved home.

Changes in Risk Profile

Renovations can also change your home’s risk profile. For instance, adding a swimming pool or a trampoline might increase the likelihood of someone getting injured on your property, which could raise your liability insurance needs. On the other hand, upgrading your home’s electrical or plumbing systems might reduce the risk of fire or water damage, potentially qualifying you for insurance discounts. Similarly, adding security features, such as deadbolt locks and fire suppression systems, may also garner lower rates.

Periods of Vacancy

If you have to move out of your home during renovations, this could affect your insurance coverage. Many policies may have limitations or exclusions for homes that are vacant for extended periods, typically 30 or 60 days. If your renovations will take longer than this, you may need to purchase additional coverage.

Building Code Upgrades

In some cases, renovations may require you to bring certain aspects of your home up to current building codes. This could involve additional costs not covered by a standard home insurance policy. However, some insurers offer endorsements, which can help cover these costs.

Learn More

Before starting any renovation project, discussing your plans with your insurance agent or broker is crucial. They can help you understand how your renovations might affect your coverage and what steps you can take to ensure you’re adequately protected. Conversely, if your home improvements aren’t reflected in your insurance coverage, you could find yourself underinsured after an incident and face sizable out-of-pocket losses.

At Paramount Insurance & Multiservice LLC, we are well-versed in the world of home insurance and will work with you to ensure you maintain appropriate coverage throughout the evolution of your home.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.